Question

The Wagner Company made the following expenditures for research and development early in 2014: $80,000 for materials, $100,000 for contract services, $80,000 for employee salaries, and $800,000 for a building with an expected life of 20 years to be used for current and future research projects. Wagner uses straight-line depreciation. The company allocated $20,000 in overhead to research and development. What is Wagners' research and development expense for 2014

Answer 1

$320,000

Step-by-step explanation:

Research & development expense for 2014 = Materials Expenditure + Contract services expenditure + Employee salaries + Building expenditure + Overhead

Research & development expense for 2014 = $80000 + $100000 + $80000 +($800000/20) + $20000

Research & development expense for 2014 = $80000 + $100000 + $80000 + $40000 + $20000

Research & development expense for 2014 = $320,000